Wave of litigation comes after bonuses go unpaid
Daily news headlines
Hundreds of bankers sue for £50 million in unpaid bonuses
LONDON - Some 250 staff at Dresdner Kleinwort in London are suing for tens of millions of pounds after their bonuses were slashed by Commerzbank following its takeover of Dresdner in 2008.Dresdner posted a €6.3 billion loss for 2008, and although the bank's previous owner, Allianz, set aside €400 million in its annual bonus pot for global staff last summer, Commerzbank took the decision to slash bonuses by 90% in January. The move was allowed as the bank invoked a material adverse change clause caused by the fact that it was forced to go cap in hand to the German government for an €18.2 billion bail-out.
Although Dresdner senior executives waived their bonuses, other angry staff have instructed two law firms, Manches and Mishcon de Reya, to retrieve their money. One employee is reported to be demanding more than £10 million, reports UK paper The Evening Standard.
The German chancellor Angela Merkel has reacted with outrage that firms bailed out by the government should still award multi-million pound bonuses.
However the bankers maintain that they have a strong case as they were notified in writing of the size of their bonuses before the payments were revoked. To ensure that staff remained at Dresdner following the takeover, Allianz placed the bonus pool in a separate account to assure staff their bonuses would be paid - these assurances were presented to the Financial Services Authority, which has already warned Dresdner of the operational risks of its staff leaving en masse as a result of the takeover. Speaking to the Standard, Michael Diekmann, chief executive of Allianz, confirmed he told Dresdner staff in August the bonus pot had been set aside. "The FSA approached us and asked us to ensure personnel stability," he said.
This, along with the written confirmation of bonus amounts to staff, indicates that the employees could have a strong case against Commerzbank.
Other former Dresdner staff in New York, Singapore and Germany are also believed to be considering legal action, says the London newspaper.
Commerzbank has not yet commented on the suit.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Banks will not be frowned upon for discount window borrowing – Fed official
Risk Live: more banks have completed paperwork to access Fed lending facility than a year ago
Capital One puts OCC’s tough stance on mergers to the test
Proposed Discover deal should be approved but will go under the microscope, ex-regulators say
As FCMs dwindle, regulators fear systemic risk
Panellists highlight dangers of clearing membership becoming more concentrated
EU banks fear green asset ratios paint an unfair picture
Industry lobbyist clashes with lawmaker over usefulness of new sustainability disclosure
EU watchdogs to launch prop trader capital review in April
Prop traders say bank-style IFR rules are driving them out, but doubt EBA will suggest changes
Investors say new SEC disclosures may sit on shelf
Advisory committee questions value of rule 605 changes, even for retail investors
CFTC hears ‘call to action’ from swaps end-users on Basel III
Commissioner Pham mulls engaging with prudential regulators over capital hit on clearing
Iosco gears up for ‘intensive work’ on AI regulation
Watchdogs risk ‘falling behind the curve’, secretary-general warns; FSB also working on guidance
Most read
- As FCMs dwindle, regulators fear systemic risk
- Top 10 operational risks for 2024
- Top 10 op risks: AI fears drive cyber risk to record high